Would you pay US$3499 for a new gadget? Apple’s anchor pricing strategy hopes that you will. I’m not personally a fan of Apple products. However, according to the Mac Observer, the tech giant has already sold 200,000 Vision Pro headsets, with suggestions it could ship 350,000 units in the first year of launch. That’s a lot of people paying a premium. Are they all Apple super-fans? Or is there something else at play?
Consider this: Meta’s competing Quest 3 mixed-reality VR headset, which touts an expansive games and apps library, costs just $499. So, why is there a $3K leap from an existing VR product to Apple’s new “spatial computing” product?
Sure, the product contains expensive components, such as silicon backplane display technology, Apple’s M2 chip (also used in the MacBook Air), a custom processor, the R1 chip to handle video feeds, and a range of sensors. But is there more to it than what’s crammed into the headset?
From a pricing psychology perspective, they’re also using a strategy called “anchor pricing”.
Photo by Vjeran Pavic / The Verge
What Is Anchor Pricing?
When consumers see a price offer, they determine whether or not that price is a fair deal. That process is based on “anchoring.” Our brains typically store and anchor prices for different products, for example, a $5 cup of coffee, which we then use to evaluate the value of other items.
Items we frequently purchase, such as specific groceries or petrol, help us develop ongoing anchor points. For example, if we usually buy a 2L milk carton for $3 and see a store selling it for $5, we instantly know the latter is expensive.
What About Unfamiliar Pricing?
For one-off purchases like a laptop, researching and comparing products and prices helps us decide our relative anchor point. Apple’s Vision Pro is another one-off purchase. Of course, there are other AR and VR headsets out there—but Apple has employed excellent marketing strategies to change the perception of it from being a competing product to an entirely new product category.
Visit the Apple Vision Pro landing page, and the first tagline you’ll see is “Welcome to the era of spatial computing”. Apple wants you to believe this is more than fancy AR/VR headset, and is in fact a replacement for your desktop and home theatre, a way to experience memories with VR photo and video albums, and communicate with people in virtual spaces.
“You’ve never seen everything like this before”, continue the marketing taglines.
Image courtesy of Apple
Now think about anchor pricing in the context of a new category of technology product. If there’s really nothing like it, how do we know whether US$3499 is a good deal? The short answer is that we don’t, which means the brand creating the new category can drop anchor where they think it will land.
Raising Anchors for New Categories
Apple is asking for a premium price. We’ve already seen people lining up at its stores on Vision Pro release day. This is, in part, because it has successfully differentiated the product from others in its category.
When a brand introduces a new product into a category, consumers see a lower price than competitors as attractive. However, when creating a new category, establishing a high anchor price can be crucial for solid future sales. Why? Because, again, consumers will perceive any lower prices in that category as an attractive offer.
Consider if Apple were to drop the price of the Vision Pro in another 3 months to $2999. This reduction would be a much better offer and potentially re-stimulate sales after the hype has worn down. What if the company were to release a Vision Pro Lite in 6 months at, say, a $1499 price point? Consumers would now see this as a “very good deal”, even though that’s a thousand dollars more than the Quest 3.
Other Pricing Strategies in the Mix
Working the demand curve is another aspect of that initial $3499 price tag. Apple may be targeting its early adopter or super-fan cohort before reducing that price to reach a larger audience. However, this still takes into account the initial anchor price strategy, as the only direct result from that lofty price point is down.
As I said in the beginning, I’m not personally a fan of Apple products. However, I am a fan of the clever marketing tactics they employ to separate themselves from the competition and price products in ways that ensure future sales viability. To me, this approach is even more forward-thinking than their latest technology.
What do you think about Apple’s Vision Pro pricing? Crazy—or clever anchor pricing?
Read more about Vision Pro sales in the The Mac Observer article here: Report: Apple Vision Pro Are Selling Like Hotcakes, Check Sales Numbers – The Mac Observer
And see an in-depth review of the Vision Pro from The Verge here: Apple Vision Pro review: magic, until it’s not – The Verge
